Sweden: GDP continues growing at a strong rate in Q4
The economy continued its solid performance in the fourth quarter, according to new data released on 28 February by Statistics Sweden (SCB). In Q4, the economy expanded a healthy 0.9% in quarter-on-quarter terms, slightly below the 1.0% growth expected by market analysts but just above the 0.8% increase logged in Q3. In addition, the Swedish economy significantly outstripped average growth in the Eurozone of 0.6%. In annual terms, the economy maintained its robust growth trajectory, accelerating from Q3’s 2.9% expansion to a 3.3% increase in Q4—the fastest pace of growth since Q2 2016.
The external sector contributed the most to Q4’s reading, as stronger global trade conditions and a weaker currency drove sturdy growth in exports. On a quarter-on-quarter basis, export growth came in at 2.4% in Q4, well above Q3’s revised 0.2% (previously reported +0.7% quarter-on-quarter). Import growth slowed to 1.2% from the revised 1.4% recorded in Q3 (previously reported: +1.6% qoq). The net contribution from the external sector consequently swung from minus 0.4 percentage points in Q3 to plus 0.6 percentage points in Q4.
Meanwhile, domestic demand conditions weakened somewhat in Q4. Private consumption increased 0.6% in quarter-on-quarter terms (Q3: +0.5% qoq; previously reported: +0.4% qoq), while government consumption expanded a slim 0.2% (Q3: +0.5% qoq; previously reported: +0.4% qoq). Strength in consumption growth was, however, offset by the deterioration in fixed investment, which dropped 1.3% in Q4 (Q3: +3.8% qoq).
Going forward, growth is likely to continue outpacing the EU average, as high levels of capacity utilization push business investment forward and improving global trade conditions boost export growth. However, elevated household debt levels could pose a threat to financial stability when monetary conditions begin to tighten, while a softer housing market will likely dampen residential investment.